Securities Code: 7988
3rd June, 2019

To our shareholders
5-3 Hikarinooka
Yokosuka-shi, Kanagawa

Nifco Inc.
Toshiyuki Yamamoto, President & Representative Director

NOTICE OF THE 67th ANNUAL GENERAL MEETING OF SHAREHOLDERS
We would like to announce that the 67th Annual General Meeting of Shareholders will be held asstated below and you are cordially invited to attend the meeting.
If you are unable to attend this meeting in person, you can exercise your voting rights
using either of the following methods. Please review the attached Reference Documents andexercise your voting rights.
[Exercising Voting Rights by Mail]
Please indicate your vote for or against the resolutions on the enclosed proxy form
which should be returned to the company to reach us no later than 5:30 p.m. on 20th June,
2019.
[Exercising Voting Rights via the Internet]
Please access the Company’s designated voting website at https://soukai.mizuhotb.co.jp/, use the “Voting Rights Exercise Code” and “Password,” displayed on the enclosed
proxy form, and input your vote for or against the resolutions by following the on-screen
guidance. Please be sure to vote no later than 5:30 p.m. on 20th June, 2019.
If you exercise your voting rights via the Internet, please confirm “Instructions forvoting via the Internet” on page 3.
The proxy will be voted as directed by the shareholders but, if there is no indication of
approval or disapproval for particular resolutions, the shareholder will be construed ashaving approved the resolution in question.
Details of the Meeting1.
2.

Date and Time:
Location:

3.

Agenda:Reports:

10 a.m., 21st June, 2019 (Friday)
4-1-23 Shiba, Minato-ku, Tokyo,
Mita NN Hall, B1F, Mita NN Building
Please refer to the map at the end of this document as the location ofthis Annual General Meeting of Shareholders differs from that of last
year.
1.

2.

Resolutions:
Resolution 1
Resolution 2
Resolution 3
Resolution 4
Resolution 5

The business report (1st April, 2018 ~ 31st March, 2019), and theconsolidated accounts together with the report of the Statutory
Auditors and the Public Accountants thereon.
The accounts (1st April, 2018 ~ 31st March, 2019)

Appropriation of retained earnings
Election of six candidates as Director
Election of two candidates as Statutory Auditor
Election of one candidate as Statutory Auditor to fill vacancy
Determining Amount and Details of Performance-Linked Share-Based
Compensation, etc. to Directors, etc.

-1-

If you attend the Annual General Meeting of Shareholders, please present the enclosed voting form
to the receptionist at the meeting.
Also, should there be any amendments to the Reference Documents, the business report, theaccounts, or the consolidated accounts, they will be published on the Company’s web site.
(https://www.nifco.com/)
We will no longer offer gifts to or hold a social gathering for shareholders at the Annual General
Meeting of Shareholders. We appreciate your understanding.

-2-Instructions for voting via the Internet
1.

How to exercise voting rights(1) In lieu of exercising voting rights in writing, you may exercise your voting rights through theCompany’s designated “Voting Website” (URL below). If you wish, you may use the voting
rights exercise code and password displayed on the right part of the enclosed proxy form tolog into the site and input your vote for or against the resolutions by following the on-screen
guidance. Please note that, you are required to change your password when logging in for the
first time.

https://soukai.mizuho-tb.co.jp/(2) The deadline for exercising voting rights is 5:30 p.m. on 20th June, 2019. Only the vote that
arrives at the Company (Transfer Agent and Registrar) by the close of the voting period will
be valid. Please exercise your rights early.
(3) If you exercise your voting rights both in writing on the proxy form and via the Internet, only
your vote placed via the Internet will be valid. In addition, if you exercise your voting rights
multiple times via the Internet, only the last vote will be valid.
(4) A new voting rights exercise code and a password (including your changed password) will
be issued for each General Meeting of Shareholders.
(5) Costs incurred when accessing and using the voting website such as Internet connection
charges are borne by shareholders.
(Notes)- Please keep your password safe, because it is an important means required for confirmingthat a person who is to vote is a shareholder. The Company (Transfer Agent andRegistrar) would never ask you for your password.
- If you input the wrong password more than a certain number of times, your password will
be rendered unusable. If your password has become unusable, please follow the on-screen
guidance to issue a new password.
- The Voting Website is verified using general Internet connection devices, but you may
not be able to use it depending on the device you use or its conditions.

2.

Contact

If you have any questions, please contact the Stock Transfer Agency Department, Mizuho Trust &Banking Co., Ltd., the Transfer Agent and Registrar.
[Contact on how to operate Voting Website]
Toll-free number: 0120-768-524 (Operating hours: 9:00 a.m. to 9:00 p.m. weekday)-3-

Reference Documents for the General Meeting of Shareholders
Resolution 1 Appropriation of retained earnings
With respect to the year-end dividend for the 67th fiscal year, the Company hereby proposes thefollowing in consideration of the operating results for the year under review and future businessdevelopment.
Matters concerning year-end dividend1)

Form of dividend
Cash

2)

Matters concerning allocation of dividend and total amount thereof
We propose to pay 31 yen per share as the year-end ordinary dividend (an ordinary dividendof 31 yen).
Total dividend will be 3,203,494,616 yen.
This will bring the annual dividend to 62 yen per share, including the interim dividend.

3)

Effective date of dividends
24th June, 2019-4-

Resolution 2 Election of six candidates as Director
The terms of office of the current six Directors will expire at the close of this General Meeting of
Shareholders. We propose the re-election of Toshiyuki Yamamoto, Fukuo Iwasaki, Masaharu
Shibao, Toshiki Yauchi and Keiji Tachikawa, and the election of Yoshiko Nonogaki.
Accordingly, we propose the election of six candidates as Director.
The candidates as Director are as follows.

No.

Name
(Date of birth)

Career summary,position and assignment at the Company(Significant concurrent positions)

April 1973
January 1995

Toshiyuki Yamamoto(11th October, 1949)
1

Reasons for proposing
the candidate as
Director

Fukuo Iwasaki(26th October, 1957)
2

Reasons for proposing
the candidate as
Director

Number of sharesof the Company
Specialheldinterests(Number of theCompany’s shares with theto be granted based Company
on the share-based
compensation plan)

Joined the Company
Head of Sagamihara Plant of theCompany
June 2002
Executive Officer of the Company
April 2008
Executive Officer of the Company,
President of Nifco America Corp.
21,606 shares
June 2012
President & Representative Director,
None(11,106
COO of the Company
shares)June 2016
Chairman, President &Representative Director, CEO &COO of the Company
June 2017
President & Representative Director,
CEO & COO of the Company (topresent)
Mr. Yamamoto is once again proposed as a candidate for Director due to his ability to
execute business strategies with strong leadership in a timely and appropriate manner,
as well as his broad experience of global management gained as the President &Representative Director of the Company from 2012, after obtaining experience as the
Head of major domestic plants and the President of the Company’s overseas
subsidiary.
April 1980
Joined the Company
April 2010
Executive Officer, Head of Nagoya
Plant of the Company
April 2013
Executive Officer, Deputy Head of
Global Sales & Manufacturing
Division of the Company
June 2014
Executive Managing Officer, Head of
22,024 shares
Manufacturing of the Company
None(7,124
shares)June 2016
Director and Executive Managing
Officer, Head of Manufacturing of theCompany
June 2018
Director and Senior Executive
Managing Officer, Head of
Manufacturing, In charge of Quality
Assurance & Purchasing of theCompany (to present)
Mr. Iwasaki is once again proposed as a candidate for Director due to his global anddiverse experience, insights and expertise cultivated through his long career mainly in
manufacturing functions such as in the position of the Head of major domestic plants
and the Deputy Head of the Global Sales & Manufacturing Division, under which heis responsible for the production structure across the Group, including overseas bases.

-5-

No.

Name
(Date of birth)

Career summary,position and assignment at the Company(Significant concurrent positions)

Number of sharesof the Company
Specialheldinterests(Number of theCompany’s shares with theto be granted based Company
on the share-based
compensation plan)

April 1985
April 2010

Masaharu Shibao(14th December, 1961)
3

Reasons for proposing
the candidate as
Director

Joined the Company
President of Nifco Deutschland
GMBH
June 2015
Executive Officer of the Company,
President of Nifco America Corp.
June 2016
Director and Executive Managing
Officer, CMO, Head of Sales of theCompany
April 2017
Director and Executive Managing
Officer, CMO, Head of Sales,
11,336 shares
Divisional General Manager of FCS
None(7,036 shares)
Business Control Division of theCompany
January 2018
Director and Executive Managing
Officer, CMO, Head of Sales, In
charge of Platform Business Divisionof the Company
June 2018
Director and Executive Managing
Officer, CMO, Head of Sales, In
charge of Technology & Platform
Business Division (Sales) of theCompany (to present)
Mr. Shibao is once again proposed as a candidate for Director due to his global anddiverse experience, insights and expertise cultivated through his long career in sales
and as the President of the Company’s subsidiaries in Europe and the U.S.
April 1985
July 2007

Toshiki Yauchi(16th July, 1961)
4

Reasons for proposing
the candidate as
Director

Joined the Company
Divisional General Manager ofCorporate Strategy Division of theCompany
June 2015
Executive Officer, Divisional General
5,886 shares
Manager of Corporate Strategy
None(4,486 shares)
Division of the Company
June 2018
Director and Executive Managing
Officer, Divisional General Manager
of Corporate Strategy Division, In
charge of Administration & Finance(to present)
Mr. Yauchi is once again proposed as a candidate for Director due to his diverse
experience, insights and expertise cultivated through his long career mainly incorporate strategy, and developing management strategies as the Divisional General
Manager of the Corporate Strategy Division and being in charge of overall IR
activities of the Company.

-6-

No.

Name
(Date of birth)

Career summary,position and assignment at the Company(Significant concurrent positions)

Number of sharesof the Company
Specialheldinterests(Number of theCompany’s shares with theto be granted based Company
on the share-based
compensation plan)

April 1962

Keiji Tachikawa(27th May, 1939)
5

Reasons for proposing
the candidate asExternal Director

Yoshiko Nonogaki(31st July, 1957)
6

Reasons for proposing
the candidate asExternal Director

Joined Nippon Telegraph andTelephone Public Corporation
June 1998
President & CEO of NTT Mobile
Communications Network, Inc.
(current NTT DOCOMO, Inc.)
June 2004
Corporate Advisor of NTT
DOCOMO, Inc.
- shares
None
NovemberPresident of Japan Aerospace
2004
Exploration Agency (JAXA)
March 2013
Retired from President of Japan
Aerospace Exploration Agency(JAXA)
June 2015
External Director of the Company (topresent)
Mr. Tachikawa is once again proposed as a candidate for External Director because
he contributes to the enhancement of the Company’s corporate governance as
External Director based on the experience and insight in corporate management hegained serving as the top management of large corporations.
April 1980
Joined Sony Corporation
SeptemberPresident & Representative Director
1992
of Sony Poland
April 2009Manager of Planning & Marketing
Department, Business & Professional- shares
None
Enterprise HQ of Sony Corporation
April 2013
Director of Global Diversity,
Personnel HQ of Sony Corporation
June 2015
External Director of Jolly-Pasta Co.,
Ltd. (to present)
Ms. Nonogaki is proposed as a candidate for External Director because the Company
expects her to reflect her broad experience and insight in the marketing field
cultivated through her career in a large corporation in the Company’s management as
External Director.

(Notes)
1. Yoshiko Nonogaki is a candidate as new Director.
2. There are no special interests between each candidate and the Company.
3. Keiji Tachikawa and Yoshiko Nonogaki are candidates as External Director.
4. The Company designated and filed Keiji Tachikawa as an independent officer pursuant to theregulations of Tokyo Stock Exchange, Inc. If this Resolution is passed and his re-election is approved,
he will continue to be an independent officer. Yoshiko Nonogaki satisfies the requirements for an
independent officer pursuant to the regulations of Tokyo Stock Exchange, Inc. The Company plans todesignate and file her as an independent officer with the said Stock Exchange.
5. Keiji Tachikawa will have served as External Director for four years at the close of this General
Meeting of Shareholders.
6. The Company has concluded an agreement with Keiji Tachikawa to limit his liabilities for damages
referred to in Article 423 (1) of the Companies Act pursuant to the provision of the Articles ofIncorporation. The limit of liabilities for damages under this agreement is the greater of either 20
million yen or the minimum total liability stipulated by laws and regulations. The Company plans toextend the aforementioned limited liability agreement if he is reappointed. In addition, if Yoshiko
Nonogaki is appointed, The Company plans to conclude an agreement with her to limit her liabilities fordamages referred to in Article 423 (1) of the Companies Act pursuant to the provision of the Articles ofIncorporation. The limit of liabilities for damages under this agreement is the greater of either 20
million yen or the minimum total liability stipulated by laws and regulations.

-7-

7.

The number of shares of the Company held by each candidate includes the number of the Company’s
shares to be granted based on the share-based compensation plan (as of June 1, 2019).
[Particulars of the Company’s shares to be granted based on the share-based compensation plan]
The Company introduced a performance-linked share-based compensation plan (hereinafter, referred toas the “Plan”), which grants the Company’s shares to Company Directors (excluding External Directors
and those who live abroad; hereinafter, the same shall apply) from FY 2016. The Company’s shares tobe granted to each candidate based on the Plan shall consist of shares granted based on the portion of(a) “base points” linked to business performance achieved in each fiscal year and the portion of(b) “ROIC achievement points” linked to business performance achieved over a certain time period. The
number of shares to be granted to each candidate based on the Plan provided in this document only
refers to the number of points granted based on the business performance which has become finalized at
the moment. Specifically, the number of the Company’s shares to be granted shows the aggregate of theaccumulated number of (a) “base points” granted by June 1, 2019 and the number of “ROIC
achievement points” granted on June 1, 2018. The voting rights pertaining to the Company’s shares tobe granted based on the Plan shall not be exercised until the granting of the Company’s shares to eachcandidate in the future. The Company’s shares corresponding to 30% of the said shares to be granted
will be sold on the market and proceeds from the sale of such shares will be granted to each candidate tosecure funds for tax payment purposes.

-8-Resolution 3 Election of two candidates as Statutory Auditor
The term of the current two Statutory Auditors will resign at the close of this General Meeting of
Shareholders. Accordingly, we propose the election of two candidates as Statutory Auditor.
The Board of Statutory Auditors’ consent has been obtained for this Resolution.
The candidates as Statutory Auditor are as follows.

No.

Name
(Date of birth)

Career summary, position at the Company(Significant concurrent positions)

Number ofshares oftheCompany
heldSpecialinterests
with theCompany

April 1977
June 2006

Tomoyasu Kato
(10th September 1953)
1

Reasons for proposing
the candidate as
Statutory Auditor

Mitsuhiro Matsumoto(7th May, 1969)
2

Reasons for proposing
the candidate asExternal Statutory
AuditorJoined the Company
Executive Officer, General Manager
of Global Purchasing Department of
the Company
June 2010
Executive Officer, Head of
Sagamihara Plant of the Company
1,000
April 2013
Executive Officer, General Manager
Nonesharesof Purchasing & Logistics
Department, General Manager ofPurchasing Department of theCompany
June 2014
Senior Advisor of Auditing Office(current Auditing Division) of theCompany (to present)
Mr. Kato is proposed as a candidate for Statutory Auditor because he has knowledge
about the Company’s business execution based on his business experience mainly inpurchasing, experience of business execution as Executive Officer, and broad
experience, including getting deeply involved in audit operations of the whole groupcompanies at the auditing section of the Company.
October 1992
Joined Aoyama Audit Corporation
April 1996
Registered as Certified Public
Accountant
October 1999
President, CPA, Matsumoto
Accounting Office (current CPA, Tax
Accountant, Matsumoto Accounting
Office) (to present)- shares
None
September
Audit & Supervisory Board Member,
2008
Suzuki Co., Ltd. (current Outside
Director, Audit & Supervisory
Committee Member) (to present)
August 2014
Outside Audit & Supervisory Board
Member, Hoden Seimitsu Kako
Kenkyusho Co., Ltd. (to present)
Mr. Matsumoto is proposed as candidate for External Statutory Auditor because hehas broad knowledge and experience in auditing the corporate management as a
Certified Public Accountant, and the Company expects him to perform theCompany’s audit properly.

(Notes)
1. Tomoyasu Kato and Mitsuhiro Matsumoto are new candidates as Statutory Auditor.
2. Mitsuhiro Matsumoto is a candidate as External Statutory Auditor.
3.
If Mitsuhiro Matsumoto is appointed, the Company plans to conclude an agreement with him to limit
his liabilities for damages referred to in Article 423 (1) of the Companies Act pursuant to the provisionof the Articles of Incorporation. The limit of liabilities for damages under this agreement is the greaterof either 10 million yen or the minimum total liability stipulated by laws and regulations.
4. Mitsuhiro Matsumoto satisfies the requirements for an independent officer pursuant to the regulations ofTokyo Stock Exchange, Inc. The Company plans to designate and file him as an independent officer
with the said Stock Exchange.

-9-Resolution 4 Election of one candidate as Statutory Auditor to fill vacancy
To prepare for a contingency in which the Company does not have the number of Statutory
Auditors required by laws and regulations, the Company proposes to elect one candidate as
Statutory Auditor to fill vacancy.
The Board of Statutory Auditors’ consent has been obtained for this Resolution.
The candidate as Statutory Auditor to fill vacancy is as follows and is proposed to fill vacancy forany one of the Statutory Auditors. The term of office of a Statutory Auditor assumed by Statutory
Auditor to fill vacancy shall be the remaining term of office of the retiring Statutory Auditor.

Name(Date of birth)

Masakazu Wakabayashi(30th January, 1963)

Reasons for proposing
the candidate asExternal Statutory
Auditor to fill vacancy

Career summary(Significant concurrent positions)
October, 1988

Joined Century Audit Corporation

December 1997

Partner of Century Audit Corporation

April 2007

Joined Yasumori Audit Corporation

May 2008

Representative Partner of Yasumori
Audit Corporation (to present)

Number ofshares of theCompany held

Specialinterests with
the Company- shares

None

Mr. Wakabayashi is proposed as External Statutory Auditor to fill a vacancy because he has
the extensive insights required to audit the corporate management as a Certified Public
Accountant, and the Company expects him to use his broad knowledge and experience for theCompany’s audit structure if he is appointed, even though he has never been directly involvedin corporate management.

(Notes)1. Masakazu Wakabayashi is a candidate as External Statutory Auditor to fill vacancy.
2. The Company has concluded an agreement with External Statutory Auditors to limit their respective
liabilities for damages referred to in Article 423 (1) of the Companies Act pursuant to the provision of
the Articles of Incorporation. The limit of liabilities for damages based on this agreement is the greaterof either 10 million yen or the minimum total liability stipulated by laws and regulations.
The Company also plans to conclude a limited liability agreement with Masakazu Wakabayashi as anExternal Statutory Auditor if he is elected as a Statutory Auditor.

- 10 -

Resolution 5 Determining Amount and Details of Performance-Linked Share-Based Compensation,etc. to Directors, etc.
1.

Reasons for this Resolution and reasons for determining this remuneration to be appropriate
The introduction of the performance-linked share-based compensation plan for the Company
Directors and Executive Officers (excluding External Directors and those who live abroad;hereinafter, referred to as “Directors, etc.”) was approved based on the resolution for“Determining Amount and Details of Performance-Linked Stock-Based Compensation, etc.
to Directors, etc.” at the 64th Annual General Meeting of Shareholders held on 24th June,
2016. The Company requests approval for continuing the Plan after making revisions to thetargeted period of the Plan, upper limit of cash to be contributed by the Company, andmethod of calculating the number of the Company’s shares to be acquired by Directors, etc.
and upper limit thereof as follows.
The Plan aims at defining the relationship between the remuneration of Directors, etc. andthe Company’s share value, and providing an incentive for increasing mid- and long-termbusiness performance and corporate value, and we believe the Plan is suitable for achieving
these objectives.
If Resolution 2 “Election of six candidates as Director” is approved in its original form,
Directors, etc. eligible under the Plan will be four Directors and nine Executive Officers.

2.

Amount of remuneration and details of the Plan
(1)

Overview of the Plan
The Plan is a share-based compensation plan, under which a trust purchases theCompany’s shares using remuneration of Directors, etc. to be contributed by theCompany as resources so as to grant and provide (hereinafter, referred to as “Grant,etc.”) the Company’s shares and cash corresponding to realization value of theCompany’s shares (hereinafter, referred to as “Company’s Shares, etc.”) to the
Directors, etc.
The Company introduced the Plan using a trust that is entrusted with cash contributedby the Company (hereinafter, referred to as the “Trust”) with a three-year trust periodthat covers three fiscal years from the fiscal year ended March 2017 to the fiscal year
ended March 2019 (the period covered by the Plan shall hereinafter be referred to as
the “Targeted Period”). However, the Company will change the Targeted Period tofiscal years covered by the Medium-to-Long Term Management Plan established by
the Company. In order to adjust the Targeted Period to correspond to the current
Medium-to-Long Term Management Plan, the Targeted Period that starts from thefiscal year under review shall be two fiscal years from the fiscal year ending March
2020 to the fiscal year ending March 2021.
1) Persons eligible for Grant, • Directors and Executive Officers of theetc. of Company’s Shares,
Company (excluding External Directors andetc. subject to this Resolution
those who live abroad)- 11 -

2) Potential impact of the Company’s shares subject to this Resolution on the total
number of outstanding shares of the Company• The amount obtained by multiplying 400
million yen by the number of years of theTargeted Period
Upper limit of cash to becontributed by the Company (as • The upper limit for the two fiscal years that arestated in (2) below)
the Targeted Period that starts from the fiscal
year under review shall be 800 million yen in
total.

Upper limit of the total numberof the Company’s Shares, etc.
to be acquired by Directors, etc.
and method of acquiring theCompany’s shares (as stated in(3) below)• The upper limit of points to be granted to
Directors, etc. for each fiscal year shall be
160,000 points.
• The number of shares obtained by converting at
1 point = 1 share is approximately 0.16% of thetotal shares outstanding (as of 31st March, 2019,
net of treasury share).
• The Company’s shares will be purchased on themarket or from the Company (sale of treasury
shares). (There will be no dilution of theCompany’s shares because the Company’s
shares to be acquired through the additional
trust for the Targeted Period that starts from thefiscal year under review will be purchased fromthe share market.)3) Details of criteria
achieving performancestated in (3) below)• It shall be changed within 0% to 200%,
according to the achievement of Medium-toLong Term Management Plan targets (EPS and
ROIC, etc.) in the last fiscal year of theMedium-to-Long Term Management Plan.

for
(as

4) Timing of Grant, etc. of the • Upon retirement.
Company’s Shares, etc. to * If a Director, etc. is deceased, cash equivalent
Directors, etc. (as stated inof realization value of Company’s shares shall(4) below)
be paid to his/her heir.

(2)Upper limit of cash to be contributed by the Company
For each Targeted Period, the Company shall contribute cash up to an amountobtained by multiplying 400 million yen by the number of years of the said Targeted
Period as remuneration for Directors, etc. and set up the Trust (including the extension
period of the trust stated in the third paragraph of this (2) below; hereinafter, the same
shall apply) of which beneficiaries are Directors, etc. who meet beneficiary criteria.
The upper limit of trust funds to be contributed to the Trust for the two fiscal years
from the fiscal year ending March 2020 to March 2021 shall be 800 million yen. The
said upper limit of trust funds to be contributed to the Trust shall be the total of thefunds to purchase the Company shares through the Trust and trust fee and expenses.
The Trust shall, according to the custodian’s instructions, purchase Company’s shareson the share market or from the Company (sale of treasury share) using trust funds as
resources.
- 12 -

During the trust period, the Company shall grant points to Directors, etc. (as stated in(3) below) and the Trust shall provide the Grant, etc. of the Company’s Shares, etc.
Upon the close of the trust period of the Trust, instead of setting up a new Trust, theTrust may be continued by changing the trust agreement and implementing an
additional trust (the said method will be applied for the Targeted Period that starts
from the fiscal year under review). In such case, the trust period of the Trust shall be
extended for the revised Targeted Period that corresponds to the Medium-to-Long
Term Management Plan that is in place at the time of extension of the trust period. For
each extended trust period, the Company shall provide an additional contribution up toa total of the amount obtained by multiplying 400 million yen by the number of yearsof the said Targeted Period, and during the extended trust period, it shall continue toissue points to Directors, etc. and the Trust shall continue to provide the Grant, etc. ofCompany’s Shares, etc. If there are Company’s shares (excluding Company’s sharesequivalent to points granted to Directors, etc. and for which the Grant, etc. has notbeen completed) and cash as of the last day of the former trust period (hereinafter,
referred to as “Remaining Shares, etc.”) in case of an additional contribution, such
Remaining Shares, etc. shall be succeeded to the Trust that is extended. The total of
Remaining Shares, etc. and trust funds to be additionally contributed shall be up to theamount obtained by multiplying 400 million yen by the number of years of said
Targeted Period.
(3)

Method of calculating the number of Company’s shares to be acquired by Directors,
etc. and upper limit
The number of the Company’s shares subject to the Grant, etc. to Directors, etc. shallbe determined according to the number of points granted to Directors, etc. each year.
In June of each year during the trust period, “fixed points” shall be granted to
Directors, etc. according to their positions with regard to the “fixed portion” and“performance base points” shall be granted to Directors, etc. with regard to the“performance-linked portion.”
In June immediately after the end of the Targeted Period, “performance-linked points”
are calculated by multiplying the number of “base performance points” accumulated
during the said Targeted Period, in principle, by the performance-linked coefficientaccording to the degree of achievement of performance targets in the Medium Term
Management Plan during the said Targeted Period. The performance-linked
coefficient shall be determined according to the degree of achievement of Medium
Term Management Plan targets (EPS and ROIC, etc.) in the last business year of theMedium Term Management Plan, and vary within 0% to 200%.
At the retirement of each Director, etc., the Grant, etc. of the Company’s Shares, etc.
shall be executed according to the accumulated number of “fixed points” and“performance-linked base points” (performance base points if before calculating
performance-linked points).
One point shall equal one Company share. In the event that Company’s shares
increase or decrease due to a share split or a consolidation of share and an adjustmentof points is determined to be fair, the Company shall adjust the number of Company’s
shares per point according to the ratio of the share split or the consolidation of share.
The upper limit of points to be granted to Directors, etc. for each fiscal year shall be
160,000 points.

- 13 -

(4)Method and Timing of Grant, etc. of Company’s Shares, etc. to Directors, etc.
Directors, etc. who meet beneficiary criteria shall be eligible for the Grant, etc. of thenumber of Company’s Shares, etc. calculated based on (3) above based on specified
procedures to determine the beneficiary upon retirement. At this time, the Director, etc.
shall be eligible for the Grant, etc. of Company’s shares equivalent to 70% of
Accumulated Points (fractional shares are rounded down), and remaining points shallbe realized in the Trust to pay the Director, etc. in the form of cash equivalent torealization value.
If a Director, etc. dies during his/her service, all Company shares corresponding to
Accumulated Points granted as of that date shall be realized in the Trust and paid tothe heir of the said Director, etc. in the form of cash equivalent to realization value.

(5)

Voting rights of Company’s shares held in the Trust
The Company’s shares held in the Trust shall not include the right to exercise voting
rights during the trust period, in order to ensure the neutrality of the management.

(6)

Treatment of dividend of retained earnings of the Company’s shares held in the Trust
Dividend of retained earnings of Company’s shares held in the Trust shall be received
by the Trust to be appropriated for its trust fee and expenses. If there is any dividend
remaining at the close of the Trust after using dividends for trust fee and expenses,
such dividend shall be paid to Directors, etc. who meet given beneficiary criteria andbecome beneficiaries of the Trust based on the trust agreement at the close of the Trust.

(7)

Other details of the Plan
Other details of the Plan shall be determined by the Board of Directors each time theTrust is set up, a trust agreement is changed, and an additional contribution is made to
the Trust.

- 14 -

[Reference]
Directors’ Remuneration Policy
1.

Fundamental policy of corporate governance
The Company desires to always be of service to all stakeholders including our employees,
customers, shareholders, investors, users, business partners and local communities.
We marked the 51st anniversary of its foundation in 2018, and formulated the following new
corporate philosophy with a commitment to a new stage of growth.
[Mission] ~ Social mission/Reason for existing ~Nifco generates ideas and cultivates technology to turn your expectations into excitement.
[Vision] ~ The way we should be to embody our Mission ~Driving change with growing inventiveness[Values] ~ Words embodying the uniqueness of Nifco ~-This is NifcoBe proactive and break throughCommunicate and collaborate
Challenge and innovate
Under the new corporate philosophy, we will keep on pursuing innovative businessdevelopment, upholding the corporate message, “WOWING THE WORLD,” toward
becoming a company that meets the expectations of stakeholders and continues to be trusted
widely by society.
We consider it necessary as a corporation to respond to the drastically changing social andeconomic environment flexibly and appropriately by strictly enforcing compliance andimplementing appropriate risk management. At the same time, we believe it important tothoroughly disseminate and practice such principles.
Based on this fundamental policy mentioned above, we endeavor to implement corporate
governance to the fullest extent as a priority issue, and to promote reinforcement of Groupmanagement.

2.

3.

Basic policy for Directors’ remuneration
The Company shall set the following basic policy for remuneration for Directors, Statutory
Auditors, and Executive Officers (hereinafter, referred to as “Directors’
remuneration”) based on the basic policy for corporate governance.
(1)

Directors’ remuneration shall be designed to contribute to our Mission: “Nifco
generates ideas and cultivates technology to turn your expectations into excitement.”(2)

Directors’ remuneration shall be designed as an independent, objective, andtransparent remuneration plan that is held accountable to our stakeholders, including
employees, customers, and shareholders.

(3)

Directors’ remuneration shall be designed to be attractive to our employees.

Remuneration level
The Company determines the level of Directors’ remuneration based on the abovementioned basic policy for Directors’ remuneration, taking into account the Company’s
management environment and after examining and analyzing the remuneration levels of
industry peers and major companies of the same size as the Company as the peer group eachyear, using an external database, etc.
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4.

Structure of remuneration(1) Directors (excluding External Directors) and Executive Officers
Company’s Remuneration to the Directors (excluding External Directors) consists of“basic remuneration” according to their positions and “performance-linked
remuneration” whereby the amount of compensation varies according to company
business performance and other factors, in order to raise their motivation to achieve
the management targets from a short-, medium- and long-term viewpoint, as well assustainable enhancement of corporate value.
The “performance-linked remuneration” consists of “bonus” and “share-based
compensation.”
For “share-based compensation,” the Company introduced a compensation plan thatuses a trust scheme to grant the Company’s Shares, etc. to each eligible person in FY
2016. Specifically, eligible persons are granted points each year and receive a grant of
the Company’s shares equivalent to the number of accumulated points from the trust
upon their retirement. Management of the Company’s shares is entrusted to Mitsubishi
UFJ Trust and Banking Corporation.
1)

Overview of the remuneration items[Basic remuneration]
Basic remuneration is paid as a monthly fixed remuneration with the amountdetermined based on positions according to the job responsibility involved as
responsibility-based remuneration to secure excellent human resources.
[Bonus]Bonus is paid to provide an incentive to contribute to improving company
performance for a single fiscal year with the aim of providing an incentive to increase
the Group’s consolidated business performance.
Consolidated sales and consolidated operating income are used as management
indicators for bonus assessment to strengthen the earnings capabilities of theCompany’s core businesses. For a bonus for certain positions, qualitative assessment
is incorporated in the assessment. The amount of bonus shall vary within at most 40%
to 180% of the base amount.
[Share-based compensation]
The Company’s shares will be granted to Directors and Executive Officers upon theirretirement with the aim of further enhancing their motivation to contribute toimproving the Company’s business performance and corporate value from a mediumto long-term viewpoint and increase value-sharing with shareholders. In the event thatthe Board of Directors determines that a Director or an Executive Officer has
committed serious inappropriate acts during their terms of office, the Board of
Directors may restrict the payment or claim the return of share-based compensation
after going through deliberation by the Nominating and Remuneration Committee.
The share-based compensation consists of performance-linked compensation(50%) and non-performance-linked compensation (50%).
• Performance-linked compensation
The amount of performance-linked compensation shall be determined, in principle,
according to factors including the degree of achievement of Medium Term
Management Plan targets (EPS and ROIC, etc.) and vary within 0% to 200%.
The Company plans to review the above-mentioned performance targets, etc. after theclose of the Medium Term Management Plan based on a new Medium Term
Management Plan.
• Non-Performance-linked compensation- 16 -

Non-performance-linked compensation shall be paid as share-based compensation to
grant a fixed number of shares in order to further enhance the link with shareholder
value.
2)

Remuneration composition ratio
The composition ratio of base amount of basic remuneration, bonus (annual incentive),and share-based compensation (medium-to-long term incentive) for the President &Representative Director is set at 50%:20%:30%.
With an eye to achieving medium-to-long term and sustainable growth, the Company
plans to review the remuneration composition ratio to increase the composition ratio
of incentive remuneration centering on share-based compensation.

(2)

External Directors
Remuneration for External Directors, who fulfill the management supervisory function
from an independent standpoint, consists only of basic remuneration, which is fixed
remuneration, and does not include a bonus, which varies according to businessperformance, and share-related remuneration such as share-based compensation.

(3)

Statutory Auditors
Remuneration, etc. for Statutory Auditors consists only of basic remuneration, which
is fixed remuneration. The amount of basic remuneration of each Statutory Auditor
shall be determined by deliberation of Statutory Auditors taking comprehensively into
account factors such as the content, volume, level of difficulty, and degree of
responsibility of duties of each Statutory Auditor. In light of duties, etc. of Statutory
Auditors, remuneration for Statutory Auditors does not include a bonus and sharerelated remuneration such as share-based compensation.

5.

Guidelines for holding own shares
The Company will promote holding of its own shares by Directors and Executive Officers inorder to further raise their motivation to improve the Company’s business performance andincrease its share price from the viewpoint of shareholders.

6.

Decision-making process
In order to enhance the independence, objectivity, and transparency of the details of the
Directors’ remuneration plan, the Company established the Nomination and Remuneration
Committee, which is chaired by and whose majority members are independent external
directors, as an advisory body of the Board of Directors on 10th December, 2018. The
Nomination and Remuneration Committee, in principle, convenes four times a year, anddeliberates on the basic policy and the details of the Directors’ remuneration plan andprovides advice and recommendations to the Board of Directors.
In order to adopt an objective viewpoint and specialized knowledge from outside theCompany regarding the Directors’ remuneration plan, the Company shall examine theremuneration level and the remuneration plan, etc. taking into consideration factors such asexternal data, economic environment, industry trends, and management conditions, based on
advice from an external remuneration consultant appointed by the Nomination andRemuneration Committee.

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7.

Engagement Policy
The Company shall promptly disclose the details of the Directors’ remuneration plan to its
shareholders through the Annual Securities Report, Business Report, Corporate Governance
Report, and the corporate website, etc. that will be prepared and disclosed in accordance withvarious laws and regulations. In addition, the Company will actively promote engagementwith institutional investors.
When disclosing information, the Company shall pay due consideration to fair disclosure.

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